Oil Prices drop as Uncertainty Weighs on The U.S.-China Trade

Amid renewed doubts over the prospects of the US and China trade deal, Oil prices fell more than 1 per cent on Monday, while worries about oversupply also weighed on the market.

Brent crude was down 69 cents, or 1.1 per cent, at $61.82 by 0730 GMT. The contract rose 1.3 per cent last week. U.S. crude was 63 cents, or 1.1 per cent, lower at $56.61 a barrel, having risen 1.9 per cent last week.

U.S. President Donald Trump said on Saturday that trade talks with China were moving along “very nicely,” and also stressed a deal will be agreed ‘if it was a right one for America’.

Phillip Futures analyst was quoted saying: “China delivered a massive deflationary shock in its factories, providing a somber tone towards the fragile state of the global economy.”

the sixteenth trade war between the world’s two biggest economies has raised concerns that a supply glut could develop in 2020 due to the slower economic growth around the world and this has prompted analysts to lower forecasts for oil demand.

Trump also said U.S. willingness to lift tariffs as part of a “phase one” agreement, news of which had boosted markets was incorrect reporting.

Underlining the impact of the trade war, data over the weekend showed that China’s producer prices fell the most in more than three years in October, as the manufacturing sector weakened, hit by the dispute and declining demand.

Analysts said that investors are also concerned about excess supplies of crude.

OPEC Secretary-General Mohammad Barkindo said last week, that the oil market outlook for next year may have upside potential, suggesting there is no need to cut output further.